Donald Trump may impose 25% tariffs on all vehicles imported into U.S.

The Trump administration is exploring whether to introduce tariffs on all vehicles imported into the United States, a move that comes as trade talks with Canada and Mexico have stalled during the NAFTA negotiations.

That could lead to 25 per cent tariffs on the same “national security” grounds used to impose U.S. steel and aluminium duties in March.

READ MORE: Trump says Canada, Mexico ‘very difficult to deal with’ during NAFTA negotiations

The plan remains in its early stages and is likely to face significant opposition from a number of interest groups, from foreign trading partners to domestic dealers of imported cars.

On Wednesday, Trump hinted there would be “some big news coming” to the U.S. auto sector.

Later that day, the U.S. Commerce Department released a statement saying the administration was considering imposing tariffs on all imported vehicles, under little-used Section 232 of the Trade Expansion Act of 1962.

“There is evidence suggesting that, for decades, imports from abroad have eroded our domestic auto industry,” U.S. Secretary of Commerce Wilbur Ross said in the statement.

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“The Department of Commerce will conduct a thorough, fair, and transparent investigation into whether such imports are weakening our internal economy and may impair the national security.”

The U.S., Canada and Mexico remain far apart on rewriting the North American Free Trade Agreement, with the discussions at an impasse
over rules for car production.

READ MORE: NAFTA stalemate looming over U.S. auto parts demands

Nearly half of vehicles sold in the U.S. are imported, many coming from assembly plants in Mexico and Canada.

Trump has already imposed hefty import tariffs on steel and aluminium under its trade act, which allows safeguards based on “national security.”

— With files from Reuters